Loving off index funds dividends to pay for life

[FrugalSaver]

This has always made me curious as over the very long term something like VTSAX dividend yields changes etc.

We know markets can lose 50% or more in any given year iver a 30-50 yard time frame

How do you think about the value of a share of say VTSAX with respect to dividends and what expectations worst case dividend wise do you consider?

I see everyone basically raising dividends now that’s an established company oddly enough.

Could I basically math out if I’m goi g to earn 1.8% in VTSAX dividends or maybe SCHD yielding 4% dividend and calculate how many shares I need to cover monthly life expenses or what is the right way to think about this?

[2Birds1Stone]

Very few early retirees plan on living strictly off of the dividends of a stock ETF/Mutual Fund.

Typically when a share price drops, the dividend yield rises.

Example

$100 share price today with a $1.5 annual dividend or 1.5% yield.

The share prices drops suddenly to $50 the dividend doesn't automatically go to $.75, it stays at $1.5 and your yield is now 3%.

This is oversimplification, because the pressure that drove the share price from $100 to $50 rarely happens in a vacuum, and ultimately the dividend will get reduced to be more in line with the new share price.

This is why most people are targeting a total market return vs. living off of dividends, also why diversification is key.

For much more detailed reading on everything related to this topic https://earlyretirementnow.com/safe-withdrawal-rate-series/

[Loren Ver]

There are some investment strategies that rely on dividends and therefore there are investments that focus on dividend payouts over something else like stock growth (vanguard has some dividend funds, examples: VASGX or VDIGX). 

There are people here that do that strategy.  I am not one of them, as I like higher risk higher reward.  I also don't like dividend taxes :(.  Capital gains works better for me.  Though I do hold a little in the two funds I listed above.  I am also looking forward to selling them.

But, as 2Birds said, diversification does have its place, at least in many strategies.  So I hold them....

Loren

[seattlecyclone]

Let me preface this with the standard disclaimer about dividends. Dividends are not special money that is different from the rest of your investment returns. There is not much difference between a company paying you a 5% dividend, vs. you selling 5% of your shares in a company that doesn't pay dividends. In the former case the company is deciding for you to liquidate 5% of your interest in the company, and in the latter you're making that decision yourself. Either way you end up with cash and your share holdings are worth proportionally less than before. The transactions are taxed a bit differently (with the sale of shares generally being the lower-taxed transaction in the US), but otherwise they're pretty equivalent.

Now that that's out of the way...

Let's look at the Great Recession as an example. VTI's dividends declined year-over-year for six straight quarters from Q2 2008 through Q3 2009. The Q4 2008 dividend was less than half of the Q4 2007 dividend, and it took a dozen years (until Q3 2019) before the VTI dividend got back to where it was in 2007. Meanwhile share prices recovered much more quickly than that, eclipsing late-2007 levels by 2013.

So if you're counting on dividends to be more recession-proof than share prices, you might want to revisit that assumption.

[Must_ache]

I still think house prices are in a bubble, stock valuations are still high, and we could be anticipating a recession that normally accompanies yield curve inversion. 
I'm in my early 50s and the bulk of my $ is in short term 5.5% CDs and SGOV or TBIL yielding 5% risk free but taxable. 
I still plan to hold a more typical stock allocation eventually, but if there were a time to time the market it could be now.
5% dividends tax-free would be great but if they are that high the stock appreciation is less likely.  Normally you are lucky to get 2% or 3% in a dividend ETF which isn't anything to write home about.  The total return is important and it's the stock price I'm more concerned with.

[Metalcat]

Dividend-only spending was a SUPER big trend, like, 6ish years ago, I think? In every second thread someone was saying they were planning for that and there were countless articles about it, and then it just disappeared.

No one was ever able to explain a solid reason for this approach beyond the fact that it psychologically feels nicer for some people to not have to sell stocks in order to spend money.

[Ron Scott]

Dividends are a strange financial duck. I’m not a fan.

Basically you have this company who has the market pricing power to take in much more revenue than it has in costs, leaving it with excess cash. Since business assets are priced higher than financial assets in the stock market, this excess cash feel like a drain on value “to some companies”.  So, instead of investing the money in growth opportunities (I guess they can’t think of any) they give it back to their owner shareholders. ‘Market conventions” make it difficult to stop paying dividends so it becomes a vicious cycle, with regular distributions of “forced income” their shareholders need to deal with at tax time regardless whether they needed the income or not.

Most of us would prefer the company could invest in itself and grow organically, or at least have the courtesy to distribute the cash in the form of a buyback, that would have the same financial affect on the shareholders but at least give them the choice of whether or if to suffer a taxable event.

But it’s even worse than that. The dividend phenomena begets charlatans who create “high dividend funds” that sound like magic money machines but almost always underperform the market over time—so you’re screwed BUT HEY, YOU GOT DIVIDENDS SO…

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

I believe most “real” retirees actually spend closer to the dividend+interest philosophy than the vaunted 4% SWR prayer group prefers but the reigning woke intelligencia makes the former approach seem like the tool of the uneducated.

So anyway, YES, there is nothing wrong in living off interest and dividends if you’re fine with the that amount of money. It is pretty much what I do, for the most part, although I have set some funds to reinvest too. But don’t buy into the game, thinking that you can’t touch principal or reinvest some of your returns during retirement. Don’t think dividend stock are better or worse than others and certainly don’t buy funds comprised of that group of companies!

It’s better to think about spending at a low WR level than to think of “living off dividends”.

[seattlecyclone]

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

This is I believe an unfair description of SWR. It's really a very conservative position, looking at what some of the worst times to retire in the past would have been and setting your withdrawal so you'd be fine (or close to fine) even if the bad history did repeat itself. "Spending your last nickel" is considered to be a very unlikely outcome. You're of course not going to be covered if we hit unprecedentedly bad times, but if markets perform pretty close to long-term averages your stash will come closer to doubling than spending down to zero.

[Ron Scott]

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

This is I believe an unfair description of SWR. It's really a very conservative position, looking at what some of the worst times to retire in the past would have been and setting your withdrawal so you'd be fine (or close to fine) even if the bad history did repeat itself. "Spending your last nickel" is considered to be a very unlikely outcome. You're of course not going to be covered if we hit unprecedentedly bad times, but if markets perform pretty close to long-term averages your stash will come closer to doubling than spending down to zero.

I did take some poetic license with the “last nickel” comment, as the SWR crowd actually focuses on the probability of spending down the stash before death. “Last nickle” adherents are a more extreme faction of the religion.

But the basic belief that past performance is indicative of future results—precisely what our leading financial institutions tell us NOT TO DO—is what makes SWR-theory a religion. It’s certainly not science, regardless how it cloaks its dogma in statistics.

The truth is we can’t predict the future and believing you can requires the gift of faith.

[EvenSteven]

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

This is I believe an unfair description of SWR. It's really a very conservative position, looking at what some of the worst times to retire in the past would have been and setting your withdrawal so you'd be fine (or close to fine) even if the bad history did repeat itself. "Spending your last nickel" is considered to be a very unlikely outcome. You're of course not going to be covered if we hit unprecedentedly bad times, but if markets perform pretty close to long-term averages your stash will come closer to doubling than spending down to zero.

I did take some poetic license with the “last nickel” comment, as the SWR crowd actually focuses on the probability of spending down the stash before death. “Last nickle” adherents are a more extreme faction of the religion.

But the basic belief that past performance is indicative of future results—precisely what our leading financial institutions tell us NOT TO DO—is what makes SWR-theory a religion. It’s certainly not science, regardless how it cloaks its dogma in statistics.

The truth is we can’t predict the future and believing you can requires the gift of faith.

Your descriptions of a SWR simply don't match up to anyone's views that I have seen on this board. People describe, I think accurately, that a 4% SWR is an historical observation of the last hundred years or so, under specified conditions. You are pushing a form of extreme nihilism, where nobody can make any educated guesses about the future because the future isn't 100% knowable.

[simonsez]

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

This is I believe an unfair description of SWR. It's really a very conservative position, looking at what some of the worst times to retire in the past would have been and setting your withdrawal so you'd be fine (or close to fine) even if the bad history did repeat itself. "Spending your last nickel" is considered to be a very unlikely outcome. You're of course not going to be covered if we hit unprecedentedly bad times, but if markets perform pretty close to long-term averages your stash will come closer to doubling than spending down to zero.

I did take some poetic license with the “last nickel” comment, as the SWR crowd actually focuses on the probability of spending down the stash before death. “Last nickle” adherents are a more extreme faction of the religion.

But the basic belief that past performance is indicative of future results—precisely what our leading financial institutions tell us NOT TO DO—is what makes SWR-theory a religion. It’s certainly not science, regardless how it cloaks its dogma in statistics.

The truth is we can’t predict the future and believing you can requires the gift of faith.

What evidence do you have that the future will have a range of investment return outcomes that are different than anything our stock market going back to 1871 has ever experienced?  About all I conclude is either you think investment outcomes will be better than anything historically (in which case you plan to FIRE even sooner than us chumps who might use SWR as a planning tool), or will be worse (in which case you don't invest in stocks at all).  Otherwise if you expect future investment performance to fall somewhere between the best and worst that we've seen the past 150+ years, how are you not also using past performance as some type of expectation moving forward?

I'm very confused by what you're writing - I'm not sure I've ever seen anyone on this forum be as dogmatically conservative and religious with respect to SWR, but here are you claiming that is the norm for SWR adherents focus on spending down the stash before death.  I usually see people talking about ending up with the same or even more later in life if they keep spending the same - or the people that use a more aggressive SWR are honest about adapting on the fly in the future (going back to work or reducing spending).  It sounds like you, in fact, did make this shit up.  LOL!

Sure, I can't predict the future but I'm fairly confident the stock market will be higher 30 years from now that it is today.  And in X years time, I will still be confident that the market will be higher in X+30 years.  If only there were a way to use this assumption to my advantage...

[seattlecyclone]

How do you make any plans for the future at all if you're unwilling to make any educated guesses about what will occur? We can acknowledge that we can't predict the future with perfect clarity while also acknowledging that history is a useful guide more often than not.

[maizefolk]

The truth is we can’t predict the future and believing you can requires the gift of faith.

Absolutely. Every night we go to sleep not knowing with certainty if we'll ever wake up again.

Yet even so, the vast majority of people still make decisions in their life that reflects the assumption that they'll still be alive a week from now, and most people make decisions based on the assumption they'll still be alive months or years from now. People do this even though is there is absolutely no way they can know for sure.

Crazy faith, ain't it?

[erp]

I think that maybe this thread underestimates some of the reasons that dividends are good.

A company which pays dividends is making cash to pay them. A stock price isn't real cash, it will rise or fall based on expected future growth - if a company like Tesla were paying a dividend, then markets tend to understand that as Tesla saying "we are pretty sure we can keep paying this amount indefinitely into the future, and still fund whatever new shit we want to do". Dividends are hard promises that require real earnings to back them up.

For an individual investor, it's nice for us if companies turn around and invest their excess cash in things that generate returns (for both tax and simplicity reasons). But for a giant institutional investor, they might have better places to invest that excess cash outside of a company (maybe they don't think Coke needs to expand any further, but there's big growth in renewable electricity - Coke might not be able to capture those returns but someone else certainly can).

In a general way, I see a company which is paying a dividend as a company that's actually making money today (alternately, they might be a company that's borrowing money to pay a dividend, which is probably terrible). They're not betting so hard on future growth that they're denying today's earnings. That appeals to me, and I think it also helps align incentives better rather than requiring a 'growth at all costs' model.

To link it to the comments about the future - dividends are a demonstration by a company that their current performance actually matches the future they're trying to sell you on.

[ChpBstrd]

I think that maybe this thread underestimates some of the reasons that dividends are good.

A company which pays dividends is making cash to pay them. A stock price isn't real cash, it will rise or fall based on expected future growth - if a company like Tesla were paying a dividend, then markets tend to understand that as Tesla saying "we are pretty sure we can keep paying this amount indefinitely into the future, and still fund whatever new shit we want to do". Dividends are hard promises that require real earnings to back them up.

For an individual investor, it's nice for us if companies turn around and invest their excess cash in things that generate returns (for both tax and simplicity reasons). But for a giant institutional investor, they might have better places to invest that excess cash outside of a company (maybe they don't think Coke needs to expand any further, but there's big growth in renewable electricity - Coke might not be able to capture those returns but someone else certainly can).

In a general way, I see a company which is paying a dividend as a company that's actually making money today (alternately, they might be a company that's borrowing money to pay a dividend, which is probably terrible). They're not betting so hard on future growth that they're denying today's earnings. That appeals to me, and I think it also helps align incentives better rather than requiring a 'growth at all costs' model.

To link it to the comments about the future - dividends are a demonstration by a company that their current performance actually matches the future they're trying to sell you on.

The flipside is high-dividend companies (excluding REITs and MLPs) are companies which are out of ideas to productively reinvest their earnings. Their best and brightest leadership cannot figure out a way to earn their cost of capital from new investments. New products won't work. Expansions to new markets won't work. Efficiency investments won't work.  Therefore, it makes sense to send the funds back to investors so that they can invest in companies that do have some potential left. Dividends are a way of winding down a past-its-prime company over the course of decades.

The whole "commitment" to dividends custom is Not A Good Thing. First, it creates a cash-draining obligation that is indifferent to what's going on inside the company. First Republic Bank was paying dividends even as their asset portfolio was being decimated and they went under 4 months after their last dividend, IIRC. Lots of other companies are paying 6-8% to borrow money in one hand, and paying out a 3-4% dividend from the other. Does that sound like a good investment? Second, it creates a cash-draining obligation that is indifferent to things going on outside the company. For example, interest rate changes, stock market corrections, liquidity crunches, and available opportunities are constantly occurring. A company committed to dividends cannot deleverage as quickly when interest rates rise, cannot buy assets when they go on fire sale, cannot raise the funds to raise their credit rating and save tons of money on interest, and cannot jump on internally-generated opportunities such as new inventions or product ideas.

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

I believe most “real” retirees actually spend closer to the dividend+interest philosophy than the vaunted 4% SWR prayer group prefers but the reigning woke intelligencia makes the former approach seem like the tool of the uneducated.

So anyway, YES, there is nothing wrong in living off interest and dividends if you’re fine with the that amount of money. It is pretty much what I do, for the most part, although I have set some funds to reinvest too. But don’t buy into the game, thinking that you can’t touch principal or reinvest some of your returns during retirement. Don’t think dividend stock are better or worse than others and certainly don’t buy funds comprised of that group of companies!

It’s better to think about spending at a low WR level than to think of “living off dividends”.

I believe you're defending a cash income model as opposed to a SWR / X% rule model, even though you are suggesting people "think about spending at a low WR level" rather than dividend income.

A lot of landlords in particular have a too-high WR compared to their equity and yet can demonstrate they're generating plenty of inflation-indexed income to cover their needs. Similarly, people with significant pensions, annuities, or side gigs find it easier to think in terms of what additional income they need rather than in terms of WRs.

The pitfall with applying an income replacement model to a portfolio containing stocks is that stock prices are highly variable and dividends are never guaranteed. The problems happen in years when dividends are cut, forcing one to sell more shares at a fraction of their previous values, reducing the future dividend stream. Stocks do not provide a reliable income, and reliability is a prerequisite to apply an income replacement model.

Less-reliable income sources like stock/bond portfolios are more appropriately assessed with a SWR model. Such a model can take into account future uncertainty and can output the historically-informed probability of portfolio survival at various WR decisions. Plus, a SWR model can easily account for reliable sources of cash income and output the necessary WR or portfolio size numbers based on the difference, and at one's desired level of risk. Similarly, SWR analysis can allow one to specify one's expected terminal age or assess the odds of leaving an inheritance.

The income model has its issues too. Lots of income sources are not adequately inflation-indexed. Some are deteriorating assets such as rental units in neighborhoods that might decline. Pensions and even certain safe bonds have a failure rate. It seems bold to forecast their returns over 30-40 years. Stock/bond portfolios, in contrast, are more diversified.

[Ron Scott]

I think it’s bad planning to put yourself in a position in which you need to sell stocks in a down market. Think lost-decade scenario: Stranger things happen, and when you’re unprepared you’re screwed.

I don’t like dividends but they’re a fact of life. Spending interest and dividends generated inside taxable accounts during retirement makes sense, but adopting a strategy that sets your spending by the amount of interest and dividends generated across your portfolio does not, to me.

The strategy that seems best suited to a retirement to me is conservative WR. Where to extract the specific funds needed from your portfolio is tactical and a bit more complex as it is affected by how you’ve structured your portfolio, tax strategy, interest in rebalancing and Roth conversions, funding large short-term expenses, etc.

Regarding future returns we are all in the dark and doing our best. The strategy to spend as a much as you can before you become nervous about running about of money not only flies in the face of the strategy that got you to FI, but threatens your FI—unnecessarily in most cases.

[Telecaster]

But the basic belief that past performance is indicative of future results—precisely what our leading financial institutions tell us NOT TO DO—is what makes SWR-theory a religion. It’s certainly not science, regardless how it cloaks its dogma in statistics.

The truth is we can’t predict the future and believing you can requires the gift of faith.

I've literally never seen anyone, and in not ever, no one, state that they believe the 4% SWR is a future guarantee.  Read the Bogleheads board if you don't believe me. 

The religion you keep railing against is a religion with zero followers. 

[tooqk4u22]

At some point in the not too distant past, the financial zeitgeist about saving and spending among retirement gurus morphed into another even stranger duck—called a Safe Withdrawal Rate. This silliness posits that the retiree-in-training adopts a religious belief that past market performance is indicative of future returns and times his spending over decades so he dies after spending his last nickel. (You can’t make this shit up LOL!)

This is I believe an unfair description of SWR. It's really a very conservative position, looking at what some of the worst times to retire in the past would have been and setting your withdrawal so you'd be fine (or close to fine) even if the bad history did repeat itself. "Spending your last nickel" is considered to be a very unlikely outcome. You're of course not going to be covered if we hit unprecedentedly bad times, but if markets perform pretty close to long-term averages your stash will come closer to doubling than spending down to zero.

I did take some poetic license with the “last nickel” comment, as the SWR crowd actually focuses on the probability of spending down the stash before death. “Last nickle” adherents are a more extreme faction of the religion.

But the basic belief that past performance is indicative of future results—precisely what our leading financial institutions tell us NOT TO DO—is what makes SWR-theory a religion. It’s certainly not science, regardless how it cloaks its dogma in statistics.

The truth is we can’t predict the future and believing you can requires the gift of faith.

What evidence do you have that the future will have a range of investment return outcomes that are different than anything our stock market going back to 1871 has ever experienced?  About all I conclude is either you think investment outcomes will be better than anything historically (in which case you plan to FIRE even sooner than us chumps who might use SWR as a planning tool), or will be worse (in which case you don't invest in stocks at all).  Otherwise if you expect future investment performance to fall somewhere between the best and worst that we've seen the past 150+ years, how are you not also using past performance as some type of expectation moving forward?

I'm very confused by what you're writing - I'm not sure I've ever seen anyone on this forum be as dogmatically conservative and religious with respect to SWR, but here are you claiming that is the norm for SWR adherents focus on spending down the stash before death.  I usually see people talking about ending up with the same or even more later in life if they keep spending the same - or the people that use a more aggressive SWR are honest about adapting on the fly in the future (going back to work or reducing spending).  It sounds like you, in fact, did make this shit up.  LOL!

Sure, I can't predict the future but I'm fairly confident the stock market will be higher 30 years from now that it is today.  And in X years time, I will still be confident that the market will be higher in X+30 years.  If only there were a way to use this assumption to my advantage...

Wow, just wow, this is the mind trip stuff I like theoretically but kills me when I have to do something in practice...damn real world.

So all this discussion takes me down the path of my psychosis of The Matrix, which pill are you taking.

 At the end of the day 150+/- years is almost entirely insignificant to our existence, heck, even if that existence were only 2000 years.   Only thing for sure is that what ever you think will be the case in 100 years (other than being dead) is likely wrong.   

We live in a time where we take for granted the fact that some a greater, but still small (us), part of the population can find a way to live on capital and not labor.   And while there is still quite a bit of inequality, whether within developed nations or those developed nations compared to the rest of the world, its historically unusual for anybody other than royalty to fathom such things. 

I struggle with the faith in the future backstopped by the historical data at the expense of the continued hamster wheel.   Its hard....belief in systems, humanity, productivity matter.   What are the options....prepare your finances enough such that a middle-of-the-road result historically is ok or work til you die....I guess the latter is failsafe.

One thing is likely for certain.....people in Ukraine and Israel, impoverished urban centers of the US, and many other parts of the world, can't even fantasize about having such conversation let alone actual having the chance at it.


Anyway back on topic, dividends are useful and generally provide for some income stability but can lead to value traps for dying companies/industries.  The best companies should be able to pay a dividend, invest in growth (innovation or acquisitions) and reduce debt to the extent they have any.

Third rail territory - stock buybacks are the worst allocation of capital.   Corporate laziness at its highest level.  I realize buybacks are tax efficient (especially when floating long term low rate debt to do it like the last decade - those days are dead) but historical data shows that buybacks generally over pay, which makes sense as when there is a ton of excess cash it usually means things are going great and that usually means the stock price is high.  It also creates a medium for execs to manage their EPS goals to get their fat payouts.  I guess I would rather have the choice to allocate my share of that excess capital

I think it’s bad planning to put yourself in a position in which you need to sell stocks in a down market. Think lost-decade scenario: Stranger things happen, and when you’re unprepared you’re screwed.

I don’t like dividends but they’re a fact of life. Spending interest and dividends generated inside taxable accounts during retirement makes sense, but adopting a strategy that sets your spending by the amount of interest and dividends generated across your portfolio does not, to me.

The strategy that seems best suited to a retirement to me is conservative WR. Where to extract the specific funds needed from your portfolio is tactical and a bit more complex as it is affected by how you’ve structured your portfolio, tax strategy, interest in rebalancing and Roth conversions, funding large short-term expenses, etc.

Regarding future returns we are all in the dark and doing our best. The strategy to spend as a much as you can before you become nervous about running about of money not only flies in the face of the strategy that got you to FI, but threatens your FI—unnecessarily in most cases.

So to summarize......don't trust the future but trust the future!

[Ron Scott]

Third rail territory - stock buybacks are the worst allocation of capital.   Corporate laziness at its highest level.  I realize buybacks are tax efficient (especially when floating long term low rate debt to do it like the last decade - those days are dead) but historical data shows that buybacks generally over pay, which makes sense as when there is a ton of excess cash it usually means things are going great and that usually means the stock price is high.  It also creates a medium for execs to manage their EPS goals to get their fat payouts.  I guess I would rather have the choice to allocate my share of that excess capital

I think it’s bad planning to put yourself in a position in which you need to sell stocks in a down market. Think lost-decade scenario: Stranger things happen, and when you’re unprepared you’re screwed.

I don’t like dividends but they’re a fact of life. Spending interest and dividends generated inside taxable accounts during retirement makes sense, but adopting a strategy that sets your spending by the amount of interest and dividends generated across your portfolio does not, to me.

The strategy that seems best suited to a retirement to me is conservative WR. Where to extract the specific funds needed from your portfolio is tactical and a bit more complex as it is affected by how you’ve structured your portfolio, tax strategy, interest in rebalancing and Roth conversions, funding large short-term expenses, etc.

Regarding future returns we are all in the dark and doing our best. The strategy to spend as a much as you can before you become nervous about running about of money not only flies in the face of the strategy that got you to FI, but threatens your FI—unnecessarily in most cases.

So to summarize......don't trust the future but trust the future!

My summary: Better to acknowledge we can’t predict future returns and hedge our bets by treating FI as a more robust concept.

Regarding buybacks, they’re not as good as productive organic growth, but because they don’t lock companies into virtually permanent cash distributions or force income on their taxpaying owners they’re better than dividends. And when the government creates a long-term  environment in which the cost of money is roughly 0, don’t be surprised when companies fund buybacks with debt.